HOLD STRATASYS LTD SSYS

Transcription

HOLD STRATASYS LTD SSYS
November 9, 2014
NASDAQ: SSYS
STRATASYS LTD
BUY
A+
A
A-
HOLD
B+
B
Annual Dividend Rate
NA
B-
C+
C
Annual Dividend Yield
NA
SELL
C-
D+
D
D-
Beta
1.24
E
E-
Market Capitalization
$5.4 Billion
Sector: Technology
SSYS BUSINESS DESCRIPTION
Stratasys Ltd. provides additive manufacturing
(AM) solutions for the creation of parts used in the
processes of designing and manufacturing
products and for the direct manufacture of end
parts.
E+
Weekly Price: (US$)
F
HOLD
52-Week Range
$85.30-$138.10
RATING SINCE
11/06/2014
Price as of 11/6/2014
$106.33
Source: S&P
SMA (50)
SMA (100)
1 Year
2 Years
140
130
120
110
100
STOCK PERFORMANCE (%)
3 Mo.
Price Change
7.50
1 Yr.
-7.02
90
3 Yr (Ann)
53.19
80
70
GROWTH (%)
Last Qtr
62.07
-372.80
-287.50
12 Mo.
71.82
-0.72
22.79
3 Yr CAGR
67.62
NA
NA
RETURN ON EQUITY (%)
SSYS
Q3 2014
-1.12
Q3 2013
-1.17
Q3 2012
9.07
Ind Avg
31.93
26.16
32.65
S&P 500
14.28
13.75
13.93
Revenues
Net Income
EPS
60
50
Rating History
BUY
HOLD
BUY
Volume in Millions
20
10
2012
2013
0
2014
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
P/E COMPARISON
RECOMMENDATION
We rate STRATASYS LTD (SSYS) a HOLD. The primary factors that have impacted our rating are mixed - some
indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a
positive or negative performance for this stock relative to most other stocks. The company's strengths can
be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable
debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we
also find weaknesses including deteriorating net income, a generally disappointing performance in the stock
itself and feeble growth in the company's earnings per share.
n/m
17.57
19.70
SSYS
Ind Avg
S&P 500
2013
Q3 -0.62
Q1 0.08
Q4 -0.07
Q3 -0.16
Q1 -0.40
Q2 -0.07
Q3 0.24
2012
Q4 -0.16
Q2 0.14
Q1 0.21
Q2 0.00
EPS ANALYSIS¹ ($)
HIGHLIGHTS
SSYS's very impressive revenue growth greatly exceeded the industry average of 13.8%. Since the same
quarter one year prior, revenues leaped by 62.1%. This growth in revenue does not appear to have trickled
down to the company's bottom line, displayed by a decline in earnings per share.
SSYS's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying
that there has been very successful management of debt levels. To add to this, SSYS has a quick ratio of 2.44,
which demonstrates the ability of the company to cover short-term liquidity needs.
44.72% is the gross profit margin for STRATASYS LTD which we consider to be strong. Despite the high profit
margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross
profit margin, SSYS's net profit margin of -15.38% significantly underperformed when compared to the
industry average.
2014
NA = not available NM = not meaningful
1 Compustat fiscal year convention is used for all fundamental
data items.
The share price of STRATASYS LTD has not done very well: it is down 7.02% and has underperformed the S&P
500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier
quarter. The fact that the stock is now selling for less than others in its industry in relation to its current
earnings is not reason enough to justify a buy rating at this time.
The company, on the basis of change in net income from the same quarter one year ago, has significantly
underperformed when compared to that of the S&P 500 and the Computers & Peripherals industry. The net
income has significantly decreased by 372.8% when compared to the same quarter one year ago, falling from
-$6.63 million to -$31.33 million.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2014. All rights reserved.
Report Date: November 9, 2014
PAGE 1
November 9, 2014
NASDAQ: SSYS
STRATASYS LTD
Sector: Technology Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
PEER GROUP ANALYSIS
80%
AB
OR
LE
NTAP WDC
STX
Research and development spending at large manufacturers generally varies between 5% and 15% of
product revenue and can be more for smaller companies and low for pure assemblers like Dell. Patent
licensing is a common practice as are disputes arising from patents. Technological advancement renders
products quickly outdated. Many products have a lifespan less than 18 months.
R
VO
FA
LE
AB
-60%
UN
Revenue Growth (TTM)
BBRY
32.5%
EBITDA Margin (TTM)
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $2.1 Billion and $22.7 Billion.
Companies with NA or NM values do not appear.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization.
80%
REVENUE GROWTH AND EARNINGS YIELD
Companies with excellent process technology, capital-intensive components production and flexible
high-volume assembly are expected to dominate the hardware value chain. Companies with patent capital,
close links to component and equipment developers and the ability to afford research and development
expenditures and capital investments will benefit the most in the future. These attributes play into the
strategic and technical strengths of Japanese companies. The US industry has superior design skills, but
remains largely fragmented, undercapitalized and lacks a long-term approach. However, some US companies
have been successful in producing structures, strategy and operational techniques necessary for
commercial success.
With the global economic recovery, the computers and peripherals industry is expected to thrive as
corporations continue to automate and upgrade their systems to increase efficiency and enhance
competitive positions. Major players in the sector derive a substantial portion of their revenues from foreign
markets adding geographic diversity to their product sales base. A weaker US dollar has given a pricing edge
to American products and services.
SSYS
V
FA
AB
OR
LE
DDD
SNDK EFII
NCR
LXK
WDC DBD
STX
NTAP
Companies have little room for errors or inefficiencies in such a competitive and economically volatile
environment. According to International Data Corp., price wars and technological evolution can drive down
prices by 25% a year.
Computer storage and peripherals are strong sellers as data storage continues to be a top priority across
businesses. Increasing amounts of data and content and the proliferation of broadband access have
necessitated greater capacity across the storage infrastructure.
PEER GROUP: Computers & Peripherals
UN
R
VO
FA
LE
AB
-60%
Price as of 11/6/2014
$106.33
The US computers and peripherals industry is one of the largest global markets, including companies such as
Apple (AAPL), IBM (IBM), Dell (DELL) and Hewlett-Packard (HPQ). The industry is capital-intensive with highly
automated operations. Larger companies are built on purchasing power and mass production while smaller
firms concentrate on product specialty and superior technology.
SNDK
EFII
Revenue Growth (TTM)
52-Week Range
$85.30-$138.10
The computers and peripherals industry includes PC equipment, handheld devices, complex information
technology systems and network equipment. Technological factors such as interoperability of hardware
products and compatibility with the web have brought about industry consolidation. Also, intense competition
and the importance of intellectual property rights have been instrumental to growth.
V
FA
DDD
7.5%
Market Capitalization
$5.4 Billion
INDUSTRY ANALYSIS
REVENUE GROWTH AND EBITDA MARGIN*
DBD NCR
Beta
1.24
-100%
BBRY
20%
Earnings Yield (TTM)
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -59.7% and
71.8%. Companies with NA or NM values do not
appear.
Ticker
SSYS
BBRY
NCR
DDD
LXK
DBD
WDC
EFII
SNDK
STX
NTAP
Recent
Company Name
Price ($)
STRATASYS LTD
106.33
BLACKBERRY LTD
10.27
NCR CORP
28.12
3D SYSTEMS CORP
34.91
LEXMARK INTL INC
42.28
DIEBOLD INC
35.90
WESTERN DIGITAL CORP
97.86
ELECTRONICS FOR IMAGING INC 45.50
SANDISK CORP
93.48
SEAGATE TECHNOLOGY PLC
62.53
NETAPP INC
43.17
Market
Cap ($M)
5,412
5,417
4,735
3,837
2,613
2,320
22,723
2,139
20,626
20,462
13,782
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2014. All rights reserved.
Price/
Earnings
NM
NM
13.72
99.74
13.51
55.23
15.29
22.86
19.39
13.93
22.84
Net Sales
TTM ($M)
688.10
4,051.00
6,493.00
589.80
3,700.40
3,001.22
15,269.00
776.54
6,620.31
14,020.00
6,298.10
Net Income
TTM ($M)
-29.41
-5,008.00
356.00
35.88
198.70
43.03
1,545.00
96.98
1,143.34
1,524.00
644.30
Report Date: November 9, 2014
PAGE 2
November 9, 2014
NASDAQ: SSYS
STRATASYS LTD
Sector: Technology Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
Beta
1.24
Market Capitalization
$5.4 Billion
52-Week Range
$85.30-$138.10
Price as of 11/6/2014
$106.33
COMPANY DESCRIPTION
Stratasys Ltd. provides additive manufacturing (AM)
solutions for the creation of parts used in the processes
of designing and manufacturing products and for the
direct manufacture of end parts. Its AM systems utilize
its patented fused deposition modeling and inkjet-based
PolyJet technologies to enable the production of
prototypes, tools used for production and manufactured
goods directly from three-dimensional (3D) CAD files or
other 3D content. The company offers desktop 3D
printers for idea and design development, a range of
systems for rapid prototyping, and production systems
for direct digital manufacturing under the MakerBot,
Mojo, uPrint, Dimension, Objet, Fortus, and SolidScape
brands. It also develops, manufactures, and sells
materials for use with its systems; and provides various
services to its customers. In addition, the company
leases or rents 3D printers and 3D production systems;
and produces prototypes and end-use parts for
customers from a customer-provided CAD file, as well as
offers support services and warranty. Its solutions are
used in architecture, automotive, aerospace and defense,
electronics, medical, footwear, toys, educational
institutions, government and entertainment, apparel,
heavy equipment, and manufacturing industries. The
company sells its products through a network of resellers
and independent sales agents to individuals, smaller
businesses, and large enterprises worldwide. Stratasys
Ltd. was founded in 1989 and is headquartered in Eden
Prairie, Minnesota.
STOCK-AT-A-GLANCE
Below is a summary of the major fundamental and technical factors we consider when determining our
overall recommendation of SSYS shares. It is provided in order to give you a deeper understanding of our
rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
valuation. Please refer to our Valuation section on page 5 for further information.
STRATASYS LTD
7665 Commerce Way
Eden Prairie, MN 55344
ISR
Phone: 952-937-3000
Fax: 952-937-0070
http://www.stratasys.com
Solvency
out of 5 stars
weak
Measures the solvency of the company based on several ratios. The
company is more solvent than 70% of the companies we analyze.
FACTOR
SCORE
2.0
Growth
out of 5 stars
weak
Measures the growth of both the company's income statement and
cash flow. On this factor, SSYS has a growth score better than 30% of
the stocks we rate.
strong
4.0
Total Return
out of 5 stars
weak
Measures the historical price movement of the stock. The stock
performance of this company has beaten 70% of the companies we
cover.
strong
1.5
Efficiency
out of 5 stars
weak
Measures the strength and historic growth of a company's return on
invested capital. The company has generated more income per dollar of
capital than 20% of the companies we review.
strong
3.0
Price volatility
out of 5 stars
weak
Measures the volatility of the company's stock price historically. The
stock is less volatile than 50% of the stocks we monitor.
strong
4.0
strong
0.5
Income
out of 5 stars
weak
Measures dividend yield and payouts to shareholders. This company
pays no dividends.
strong
THESTREET RATINGS RESEARCH METHODOLOGY
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2014. All rights reserved.
Report Date: November 9, 2014
PAGE 3
November 9, 2014
NASDAQ: SSYS
STRATASYS LTD
Sector: Technology Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
Consensus EPS Estimates² ($)
IBES consensus estimates are provided by Thomson Financial
0.73
2.26 E
3.00 E
Q4 FY14
2014(E)
2015(E)
Beta
1.24
Market Capitalization
$5.4 Billion
52-Week Range
$85.30-$138.10
Price as of 11/6/2014
$106.33
FINANCIAL ANALYSIS
STRATASYS LTD's gross profit margin for the third quarter of its fiscal year 2014 has significantly decreased
when compared to the same period a year ago. Even though sales increased, the net income has decreased,
representing a decrease to the bottom line. STRATASYS LTD is extremely liquid. Currently, the Quick Ratio is
2.44 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has
decreased from the same period last year, indicating deteriorating cash flow.
At the same time, stockholders' equity ("net worth") has remained virtually unchanged only increasing by
4.94% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is
very unlikely to face financial difficulties in the near future.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.
INCOME STATEMENT
Net Sales ($mil)
EBITDA ($mil)
EBIT ($mil)
Net Income ($mil)
Q3 FY14
203.61
NA
-8.77
-31.33
Q3 FY13
125.63
20.20
0.91
-6.63
Q3 FY14
458.88
2,997.88
50.00
2,617.18
Q3 FY13
615.75
2,762.29
0.00
2,493.97
Q3 FY14
44.72%
NA
-4.31%
0.23
-0.98%
-1.12%
Q3 FY13
63.63%
16.07%
0.73%
0.14
-1.05%
-1.17%
Q3 FY14
3.20
0.02
0.00
NA
Q3 FY13
6.77
0.00
0.00
NA
Q3 FY14
51
0.00
-0.62
51.42
NA
1,135,424
Q3 FY13
49
0.00
-0.16
51.17
NA
1,190,622
BALANCE SHEET
Cash & Equiv. ($mil)
Total Assets ($mil)
Total Debt ($mil)
Equity ($mil)
PROFITABILITY
Gross Profit Margin
EBITDA Margin
Operating Margin
Sales Turnover
Return on Assets
Return on Equity
DEBT
Current Ratio
Debt/Capital
Interest Expense
Interest Coverage
SHARE DATA
Shares outstanding (mil)
Div / share
EPS
Book value / share
Institutional Own %
Avg Daily Volume
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2014. All rights reserved.
Report Date: November 9, 2014
PAGE 4
November 9, 2014
NASDAQ: SSYS
STRATASYS LTD
Sector: Technology Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
RATINGS HISTORY
Our rating for STRATASYS LTD was recently
downgraded from Buy to Hold on 11/6/2014. As of
11/6/2014, the stock was trading at a price of
$106.33 which is 23.0% below its 52-week high of
$138.10 and 24.7% above its 52-week low of $85.30.
HOLD: $106.33
HOLD: $68.16
BUY: $62.56
2 Year Chart
Price/Earnings
$100
2
3
Price as of 11/6/2014
$106.33
To
Hold
Buy
Hold
Buy
(as of 11/6/2014)
49.24% Buy - We believe that this stock has the
opportunity to appreciate and produce a total return of
more than 10% over the next 12 months.
29.51% Hold - We do not believe this stock offers
conclusive evidence to warrant the purchase or sale of
shares at this time and that its likelihood of positive total
return is roughly in balance with the risk of loss.
21.25% Sell - We believe that this stock is likely to
decline by more than 10% over the next 12 months, with
the risk involved too great to compensate for any
possible returns.
5
SSYS NM
Peers 17.57
• Neutral. The absence of a valid P/E ratio happens
when a stock can not be valued on the basis of a
negative stream of earnings.
• SSYS's P/E is negative making this valuation
measure meaningless.
1
2
3
4
1
2
3
premium
5
4
5
1
2
premium
3
4
5
3
4
5
discount
SSYS NA
Peers 12.09
• Neutral. The P/CF ratio is the stock’s price divided
by the sum of the company's cash flow from
operations. It is useful for comparing companies
with different capital requirements or financing
structures.
• Ratio not available.
Price to Earnings/Growth
1
2
3
premium
4
5
discount
SSYS NA
Peers 0.99
• Neutral. The PEG ratio is the stock’s P/E divided by
the consensus estimate of long-term earnings
growth. Faster growth can justify higher price
multiples.
• Ratio not available.
Earnings Growth
1
2
3
4
lower
5
higher
SSYS 22.79
Peers 33.67
• Lower. Elevated earnings growth rates can lead to
capital appreciation and justify higher
price-to-earnings ratios.
• However, SSYS is expected to significantly trail its
peers on the basis of its earnings growth rate.
Sales Growth
discount
SSYS 7.87
Peers 2.97
• Premium. In the absence of P/E and P/B multiples,
the price-to-sales ratio can display the value
investors are placing on each dollar of sales.
• SSYS is trading at a significant premium to its
industry.
2
premium
discount
SSYS 2.07
Peers 4.82
• Discount. A lower price-to-book ratio makes a
stock more attractive to investors seeking stocks
with lower market values per dollar of equity on the
balance sheet.
• SSYS is trading at a significant discount to its
peers.
Price/Sales
1
Price/CashFlow
discount
SSYS 35.44
Peers 14.38
• Premium. A higher price-to-projected earnings ratio
than its peers can signify a more expensive stock
or higher future growth expectations.
• SSYS is trading at a significant premium to its
peers.
Price/Book
RATINGS DEFINITIONS &
DISTRIBUTION OF THESTREET RATINGS
4
discount
premium
Price reflects the closing price as of the date listed, if available
Research Contact: 212-321-5381
Sales Contact: 866-321-8726
1
premium
Price/Projected Earnings
From
Buy
Hold
Buy
Buy
52-Week Range
$85.30-$138.10
VALUATION
HOLD. The current P/E ratio is negative, which has no meaningful value in the assessment of premium or
discount valuation, it simply displays that the company has negative earnings. To use another comparison, its
price-to-book ratio of 2.07 indicates a discount versus the S&P 500 average of 2.72 and a significant discount
versus the industry average of 4.82. The price-to-sales ratio is well above both the S&P 500 average and the
industry average, indicating a premium. The valuation analysis reveals that, STRATASYS LTD seems to be
trading at a premium to investment alternatives within the industry.
$120
2013
TheStreet Ratings
14 Wall Street, 15th Floor
New York, NY 10005
www.thestreet.com
Market Capitalization
$5.4 Billion
$140
$80
MOST RECENT RATINGS CHANGES
Date
Price
Action
11/6/14
$106.33 Downgrade
8/12/14
$114.24
Upgrade
3/5/13
$68.16 Downgrade
11/6/12
$62.56 No Change
Beta
1.24
1
2
3
lower
4
5
higher
SSYS 71.82
Peers 5.62
• Higher. A sales growth rate that exceeds the
industry implies that a company is gaining market
share.
• SSYS has a sales growth rate that significantly
exceeds its peers.
DISCLAIMER:
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the
investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at
http://www.thestreet.com/static/about/terms-of-use.html.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2014. All rights reserved.
Report Date: November 9, 2014
PAGE 5